Cybersecurity leader CrowdStrike is making a significant move into AI-focused security by acquiring two startups, Fiddler AI and Dreadnode, for nearly $500 million combined. Fiddler AI, acquired for about $400 million, specializes in AI agent observability software that helps enterprises monitor AI activity within their systems. Dreadnode, purchased for roughly $95 million, offers automated AI security testing to identify vulnerabilities in AI models and applications before deployment. These acquisitions come at a time when many companies are rapidly adopting AI agents, creating urgent demand for robust AI security tools.

The surge in AI integration across industries has escalated security challenges, as organizations struggle to keep policies and processes aligned with AI usage. Employees and teams increasingly deploy AI agents to automate workflows and build custom applications, prompting complex security oversight problems. CrowdStrike, whose security platforms serve numerous enterprises and governments, is leveraging its strong foothold in cybersecurity to expand into this emerging market, which Gartner projects will approach $5 billion by 2027. Other security firms and startups are similarly focusing on AI security, emphasizing that traditional security software cannot fully address the new risks AI presents.

CrowdStrike plans to integrate Fiddler AI and Dreadnode into its existing Falcon platform. Fiddler AI’s technology will be incorporated as Falcon Observe, enabling clients to assess and continuously monitor AI agents and feed data into CrowdStrike’s broader telemetry system. Dreadnode’s automated security testing will enhance Falcon Guardian by providing real-time testing results and security recommendations for AI deployments. These integrations aim to provide clients with comprehensive visibility and control over AI agents in their environments, strengthening defenses against potential AI-specific threats.

Founded in 2018, Fiddler AI has raised around $99 million before the acquisition, while Dreadnode, only established in 2023, had raised $14 million. CrowdStrike’s strategic purchases reflect the rapid evolution and growing complexity of AI security as a top priority for enterprises. With AI agents becoming pervasive, the company is positioning itself to be a leader in securing these intelligent tools, addressing a critical need for visibility, testing, and compliance in the expanding AI security landscape.